Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279199 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10450
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
How do households adjust their spending behavior in response to changes in home price expectations? We conduct a field experiment with a sample of Americans that links survey data on home price expectations to actual spending behaviour as measured in a rich home-scanner dataset. In the experiment we exogenously vary households' home price expectations by providing them with different expert forecasts. Homeowners do not adjust their spending in response to exogenously higher home price expectations, consistent with wealth effects and higher expected housing costs offsetting each other. However, renters reduce their spending in response to an increase in home price expectations. We provide evidence that the effects on renters operate through an increase in expected rental costs and higher expected costs of a future home that many renters intend to buy. Our evidence has implications for the role of asset price expectations in business cycle dynamics and consumption inequality.
Subjects: 
consumption
expectations
home prices
homeowner
information
renter
JEL: 
D14
D83
D84
E03
E21
Document Type: 
Working Paper
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